Governor’s Oil Tax Giveaway Moves Despite Many Unanswered Questions

Published: March 1, 2011

Bill could give away $2 billion a year with no proof of effectiveness

JUNEAU – Last night, the House Resources Committee passed Governor Parnell’s bill to give away around $2 billion of Alaska’s oil wealth each year despite many unanswered questions by committee members. The committee’s expedited timeline for moving the bill left only one day to hear the details of the actual bill language and two days for proposing and discussing amendments.

“The Legislature is not upholding its responsibility to Alaskans when we rush to make changes of this magnitude without having the facts,” said Rep. Berta Gardner (D-Anchorage) who sits on the House Resources Committee.

“A company would never make a $2 billion a year gamble with this little information,” said fellow Resources Committee member Rep. Scott Kawasaki (D-Fairbanks). “They haven’t shown us what we’re getting for the credits we’re paying now, and they certainly haven’t shown us what we will get for adding another $2 billion to oil company profits each year.”

The two Democrats were able to pass two amendments to the bill before the committee moved the bill. The first would allow the Department of Revenue six years to review tax credit applications to ensure the money being credited was spent on qualifying Alaska investments. The governor’s proposal would have cut that time to four years, making it more likely the state would have to grant credits without having the time to verify their legitimacy.

“It’s important we know what we’re getting for the hundreds of millions in tax credits we’re giving,” said Rep. Gardner. “And the Department of Revenue should have enough time to make sure Alaska is getting what it’s paying for.”

The second amendment the Democrats passed provides an incentive for the oil industry to hire Alaskans. It would give a tax break to producers who hire Alaskans for more than 80% of their workforce. As a company’s percentage of payroll going to Alaskans increases, the company would receive a greater deduction on its taxes.

“Alaskans deserve a shot at the good jobs on the Slope,” said Rep. Kawasaki. “This Alaska-hire amendment is the only thing in the bill that we know for sure what we’re getting for what we’re giving.”

Democrats say there are better ways to get more oil into the pipeline such as leveling the playing field for new producers looking to use existing facilities to get their oil from the well into the Trans Alaska Pipeline System (TAPS).